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EXHIBIT 10.7
EMPLOYMENT AGREEMENT
Agreement, made as of the 1st day of January 1997, by and between The DII
Group, Inc., a Delaware corporation (the "Company"), and Xxxxxx X. Xxxxxx (the
"Executive").
RECITALS
A. The Company desires to continue to employ Executive as Senior Vice
President of Sales and Marketing; and
B. Executive is willing to accept such employment on the terms and
conditions set forth in this Agreement.
THE PARTIES AGREE as follows:
1. Position and Term of Employment. Executive's employment hereunder
shall commence as of January 1, 1997 and shall end December 31, 2000, unless
terminated sooner pursuant to Section 7 of this Agreement or extended by the
mutual agreement of the parties. During the term hereof, Executive shall be
employed as Senior Vice President of Sales and Marketing of the Company and
shall devote his full business time, skill, attention and best efforts in
carrying out his duties and promoting the best interests of the Company.
Executive shall also serve as a director and/or officer of one or more of the
Company's subsidiaries as may be requested from time to time by the Board of
Directors. Subject always to the instructions and control of the Board of
Directors of the Company, Executive shall report to the Chief Executive Officer
of the Company and shall be responsible for the duties of the Senior Vice
President of Sales and Marketing.
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Executive shall not at any time while employed by the Company or any of
its affiliates or for a period of one (1) year following the later of (i)
termination of employment for any reason or (ii) the date on which the last
payment is required to be made under Section 2.1(a)(ii) hereof, without the
prior consent of the Board of Directors, knowingly acquire any financial
interests, directly or indirectly, in or perform any services for or on behalf
of any business, person or enterprise which undertakes any business in
competition with the business of the Company and its affiliates or sells to or
buys from or otherwise transacts business with the Company and its affiliates;
provided that Executive may acquire and own not more than five percent (5%) of
the outstanding capital stock of any public corporation or mutual fund.
Executive shall not at any time while employed by the Company or
any of its affiliates or for a period of two (2) years following termination of
employment for any reason, directly or indirectly, solicit for employment,
employ or enter into any business or contractual relationship with any employee
of the Company or any of its affiliates.
2.1 Base Salary. (a) (i) Executive shall be paid an initial salary at
the monthly rate of Fourteen Thousand One Hundred Sixty-Seven Dollars
($14,167), which shall be paid in accordance with the Company's normal payroll
practice with respect to salaried employees, subject to applicable payroll
taxes and deductions (the "Base Salary"). Executive's Base Salary shall be
subject to review and possible change in accordance with the usual practices
and policies of the Company. However, Executive's base annual salary shall not
be reduced unless such reduction is part of a Company-wide reduction in pay
scale and such reduction is proportionate to reductions imposed on the
Company's and its subsidiaries' employees; however, in no event may Executive's
then current Base Salary be reduced by more than 10%.
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(ii) If for any reason other than Executive's voluntary resignation or
termination pursuant to Sections 7(a), (b) or (c) hereof, Executive does not
continue to be employed by the Company, Executive shall continue to receive an
amount equal to his then current Base Salary plus an annual performance bonus
equal to the highest annual bonus payment Executive has received in the
previous three years for the then remaining balance of the term of this
Agreement. In no event shall such payment be less than one year's base salary
plus such highest annual bonus. The foregoing amounts shall be paid to
Executive over the remaining term of this Agreement or one year (whichever is
applicable) in accordance with the Company's payroll and bonus payment
policies. Notwithstanding the foregoing, no payments under this subparagraph
(ii) shall be made if the Company makes all payments to Executive required to
be made under the Executive's Senior Executive Severance Agreement (the
"Severance Agreement") in the event of a Change in Control. For purposes of
this Agreement, a Change in Control shall be deemed to have taken place upon
the occurrence of any of the following events:
(A) any corporation, person, other entity or group (other than the
trustee of any qualified retirement plan maintained by the Company) becomes the
"beneficial owner" (as defined in Rule 13d-3 under the Securities Exchange Act
of 1934), directly or indirectly, of securities representing twenty percent
(20%) or more of the combined voting power of the Company's then outstanding
securities; or
(B) during any period of twenty-four consecutive months,
individuals who at the beginning of such consecutive twenty-four month period
constitute the Board of Directors cease for any reason (other than retirement
upon reaching normal retirement age, disability or death) to constitute at
least a majority thereof, unless the election or the nomination
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for election by the Company's stockholders of each new director was approved by
a vote of at least two-thirds of the directors then still in office who were
directors at the beginning of such twenty-four month period; or
(C) the stockholders of the Company approve a merger or
consolidation of the Company with any other corporation, other than a merger or
consolidation which would result in the voting securities of the Company
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting securities of the
surviving entity) at least 80% of the combined voting power of the voting
securities of the Company or such surviving entity outstanding immediately
after such merger or consolidation, or the stockholders of the Company approve
a plan of complete liquidation of the Company or an agreement for the sale or
disposition by the Company of all or substantially all the Company's assets; or
(D) there shall occur a transaction or series of transactions
which the Board of Directors shall determine to have the effect of a Change in
Control.
(b) If Executive resigns voluntarily or ceases to be employed by the
Company (or any affiliate) for any reason described in Section 7(a) or (c) of
this Agreement, all benefits described in Sections 2 and 4 hereof shall
terminate (except to the extent previously earned or vested).
(c) If Executive's employment shall have been terminated pursuant to
Section 7(b), the Company shall pay in equal monthly installments for the then
remaining balance of the term of this Agreement to Executive (or his
beneficiaries or personal representatives, as the case
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may be) disability benefits at a rate per annum equal to one hundred percent
(100%) of his then current Base Salary, plus amounts equal to the highest
annual bonus as provided in clause (ii) of Section 2.1(a), less payments and
benefits, if any, received under any disability plan or insurance provided by
the Company and less any "sick leave" payments received from the Company for
the applicable period.
2.2 Bonuses. Executive shall be eligible for an annual performance bonus
for calendar years beginning after December 31, 1996, in accordance with the
Company's Senior Executive Performance Bonus Plan. The Company shall
administer such bonus plan on a basis consistent with the past.
2.3 Expenses. During the term hereof, the Company shall pay or reimburse
Executive in accordance with the Company's normal practices any travel, hotel
and other expenses or disbursements reasonably incurred or paid by Executive in
connection with the services performed by Executive hereunder, in each case
upon presentation by Executive of itemized accounts of such expenditures or
such other supporting information as the Company may require.
3.1 Stock Options; Performance Shares. Executive shall be eligible for
grants of stock options and performance share awards under the Company's 1994
Stock Incentive Plan (the "Plan"), as may hereafter be determined by the
Compensation Committee of the Board of Directors of the Company under the Plan.
3.2 Forgiveness of Indebtedness. The Company agrees to forgive the
outstanding indebtedness of Executive to the Company in the principal amount of
$100,531, together with interest accrued and accruing thereon (collectively,
the "Aggregate Indebtedness"), subject to the following terms. On the first
anniversary of the date hereof, 25% of the Aggregate
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Indebtedness then outstanding shall be forgiven; on the second anniversary of
the date hereof, 33-1/3% of the Aggregate Indebtedness then outstanding shall
be forgiven; on the third anniversary of the date hereof, 50% of the Aggregate
Indebtedness then outstanding shall be forgiven; and any remaining Aggregate
Indebtedness shall be forgiven on the fourth anniversary of the date hereof.
In addition, the Company shall make certain payments on an After-Tax Basis to
Executive on each of the first, second, third and fourth anniversary dates
equal to Executive's actual federal, state and local tax liability resulting
from the forgiveness of the Aggregate Indebtedness on any such date. Further,
in the event that Executive's employment is terminated as a result of death,
disability, or for any reason other than Executive's voluntary resignation or
termination pursuant to Section 7(c), the amount of the Aggregate Indebtedness
then outstanding shall be forgiven in full and the Company shall make
additional payments on an After-Tax Basis to Executive equal to Executive's
actual federal, state and local tax liability resulting from the forgiveness of
the Aggregate Indebtedness. Further, if at any time during the term of
employment there is a Change in Control, the amount of the Aggregate
Indebtedness then outstanding shall be forgiven in full effective immediately
upon the Change in Control and the Company shall immediately make additional
payments on an After-Tax Basis to Executive equal to Executive's actual
federal, state and local tax liability resulting from the forgiveness of the
Aggregate Indebtedness. For purposes of this Section 3.2, After-Tax Basis
shall mean with respect to any payment to be received or deemed to be received
by Executive, the amount of such payment (the "Base Payment") supplemented by a
further payment (the "Additional Payment") to Executive so that the sum of the
Base Payment plus the Additional Payment shall, after deducting all taxes
imposed on such Executive as a result of the receipt or accrual of the Base
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Payment and such Additional Payment, be equal to the Base Payment. If at any
time during the term of employment, Executive voluntarily resigns or is
terminated pursuant to Section 7(c), Executive shall forfeit any benefits not
yet then realized under this Section 3.2. For example, if Executive
voluntarily resigns in December 1998, Executive shall not realize any of the
forgiveness which would have occurred on January 1, 1999.
3.3 Effect of Termination of Employment; Change in Control. (a)
Notwithstanding the provisions of Executive's options, if Executive shall
resign voluntarily or cease to be employed by the Company (or an affiliate)
other than as a result of death or disability, Executive shall be entitled to
exercise such options to the extent such options could otherwise have been
exercised immediately prior to the time of termination at any time up to and
including 90 days after the date of termination, but not beyond the expiration
date of an option. This provision is not intended to limit any other rights
that Executive may have with respect to the vesting or exercise of options.
(b) If Executive shall die or become disabled, all options and
performance shares which have not vested will accelerate and vest immediately,
and, in the event of Executive's death, all option rights will transfer to
Executive's representative. All then unexercised options will be cancelled one
year after Executive dies or becomes disabled.
(c) If there is a Change in Control, all options and performance shares
which have not vested will accelerate and vest immediately.
4. Other Benefits. Executive shall be entitled to (i) participate in
medical, dental, hospitalization, disability and life insurance benefit plans
made available by the Company to its senior executives and shall also be
eligible to participate in existing retirement or pension plans offered by the
Company to its senior executives, subject in each case to the terms and
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requirements of each such plan or program, (ii) reimbursement for
country club dues at one country club, (iii) reimbursement for automobile lease
payments up to $700 per month and non-routine maintenance costs, and (iv) an
annual financial and tax-planning allowance up to 1% of base salary.
5. Confidential Information. Except as specifically permitted by this
Section 5, and except as required in the course of his employment with the
Company, while in the employ of the Company or thereafter, Executive will not
communicate or divulge to or use for the benefit of himself or any other
person, firm, association, or corporation without the prior written consent of
the Company, any Confidential Information (as defined herein) owned, or used by
the Company or any of its affiliates that may be communicated to, acquired by
or learned of by Executive in the course of, or as a result of, Executive's
employment with the Company or any of its affiliates. All Confidential
Information relating to the business of the Company or any of its affiliates
which Executive shall use or prepare or come into contact with shall become and
remain the sole property of the Company or its affiliates.
"Confidential Information" means information not generally known about the
Company and its affiliates, services and products, whether written or not,
including information relating to research, development, purchasing, marketing
plans, computer software or programs, any copyrightable material, trade secrets
and proprietary information, including, but not limited to, customer lists.
Executive may disclose Confidential Information to the extent it (i)
becomes part of the public domain otherwise than as a result of Executive's
breach hereof or (ii) is required to be disclosed by law. If Executive is
required by applicable law or regulation or by legal process
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to disclose any Confidential Information, Executive will provide the Company
with prompt notice thereof so as to enable the Company to seek an appropriate
protective order.
Upon request by the Company, Executive agrees to deliver to the Company at
the termination of Executive's employment, or at such other times as the
Company may request, all memoranda, notes, plans, records, reports and other
documents (and all copies thereof) containing Confidential Information that
Executive may then possess or have under his control.
6. Assignment of Patents and Copyrights. Executive shall assign to the
Company all inventions and improvements within the existing or contemplated
scope of the Company's business made by Executive while in the Company's
employ, together with any such patents or copyrights as may be obtained
thereon, both domestic and foreign. Upon request by the Company and at the
Company's expense, Executive will at any time during his employment with the
Company and after termination regardless of the reason therefor, execute all
proper papers for use in applying for, obtaining and maintaining such domestic
and foreign patents and/or copyrights as the Company may desire, and will
execute and deliver all proper assignments therefor.
7. Termination.
(a) This Agreement shall terminate upon Executive's death.
(b) The Company may terminate Executive's employment hereunder upon
fifteen (15) days' written notice if in the opinion of the Board of Directors,
Executive's physical or mental disability has continued or is expected to
continue for one hundred and eighty (180) consecutive days and as a result
thereof, Executive will be unable to continue the proper performance of his
duties hereunder. For the purpose of determining disability, Executive agrees
to submit to such reasonable physical and mental examinations, if any, as the
Board of Directors
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may request and hereby authorizes the examining person to disclose his findings
to the Board of Directors of the Company.
(c) The Company may terminate Executive's employment hereunder
"for cause" (as hereinafter defined). If Executive's employment is terminated
for cause, Executive's salary and all other rights not then vested under this
Agreement shall terminate upon written notice of termination being given to
Executive. As used herein, the term "for cause" means the occurrence of any of
the following:
(i) Executive having willfully and continually failed
to perform substantially his duties with the Company (other
than such failure resulting from incapacity due to physical
or mental illness, death or disability) after a written
demand for substantial performance has been delivered to the
Executive by the Board or the President of the Company which
specifically identifies the manner in which the Executive is
not substantially performing his duties; or (ii) Executive
having willfully engaged in conduct which is materially
demonstrably injurious to the Company. For purposes of this
section, no act, or failure to act, on the part of the
Executive shall be considered "willful" unless done, or
omitted to be done, by the Executive in bad faith and
without reasonable belief that such action or omission was
in, or not opposed to, the best interests of the Company.
Any act or failure to act based upon authority given
pursuant to a resolution duly adopted by the Board or based
upon the advice of counsel to the Company shall be
conclusively presumed to be done or omitted to be done by
the Executive in good faith and in the best interests of the
Company. Notwithstanding the foregoing, the Executive shall
not be deemed to have been terminated for cause unless and
until there shall have been delivered to the Executive a
copy of a written resolution duly adopted by the affirmative
vote of not less than three-quarters (3/4) of the entire
membership of the Board at a meeting called and held for
that purpose after reasonable notice to and opportunity for
the Executive and the executive's counsel to be heard by
the Board, finding that in the good faith opinion of the
Board the Executive was guilty of the conduct set forth
above in (i) or (ii) and specifying the particulars thereof
in detail.
8. Additional Remedies. Executive recognizes that irreparable injury will
result to the Company and to its business and properties in the event of any
breach by Executive of the non-compete or non-solicitation provisions of
Section 1, the confidentiality provisions of
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Section 5 or the assignment provisions of Section 6 and that Executive's
continued employment is predicated on the covenants made by him pursuant to
such Sections. In the event of any breach by Executive of his obligations
under said provisions, the Company shall be entitled, in addition to any other
remedies and damages available, to injunctive relief to restrain any such
breach by Executive or by any person or persons acting for or with Executive in
any capacity whatsoever and other equitable relief.
9. Successors and Assigns. This Agreement is intended to bind and inure
to the benefit of and be enforceable by Executive and the Company and their
respective legal representatives, successors and assigns. Neither this
Agreement nor any of the duties or obligations hereunder shall be assignable by
Executive.
10. Governing Law; Jurisdiction. This Agreement shall be interpreted and
construed in accordance with the laws of the State of Colorado. Each of the
Company and Executive consents to the jurisdiction of any state or federal
court sitting in Colorado, in any action or proceeding arising out of or
relating to this Agreement.
11. Headings. The paragraph headings used in this Agreement are for
convenience of reference only and shall not constitute a part of this Agreement
for any purpose or in any way affect the interpretation of this Agreement.
12. Severability. If any provision, paragraph or subparagraph of this
Agreement is adjudged by any court to be void or unenforceable in whole or in
part, this adjudication shall not affect the validity of the remainder of this
Agreement. In addition, to the extent possible, a like valid term which meets
the objective of the void or unenforceable term shall be substituted for any
such void or unenforceable term.
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13. Complete Agreement. This document embodies the complete agreement and
understanding among the parties, written or oral, which may have related to the
subject matter hereof in any way and shall not be amended orally, but only by
the mutual agreement of the parties hereto in writing, specifically referencing
this Agreement.
14. Counterparts. This Agreement may be executed in one or more separate
counterparts, all of which taken together shall constitute one and the same
Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first above written.
THE DII GROUP, INC.
By:
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Title:
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XXXXXX X. XXXXXX
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